Suggestions for withdrawl rules

John Rice on

We are going to change our partnership agreement soon to
remove the 1% withdrawl penalty, adding a ban on REIT and
MLP's investing, and adding options as a choice. Should we
add any rules on partial withdrawls, such as a limit to how
many partial withdrawls per partner per year. For example,
a partner is unemployeed for a year, needs to withdrawl some
money but does not want to leave the club and wants to
withdrawl as little as needed. Or have no stated rules and
have it as a case by case basis.

John Rice
ABODI Investment Club

Lynn Ostrem on

Hi John,

I would like to suggest that you keep your "rules" as few as possible, and limit them to the most pertinent items, like how to get in, how to get out, and anything that deals with monetary issues - like the withdrawal fees.

I would recommend that you leave bans on REITs and MLPs, and partial withdrawals, out of your partnership agreement and, instead, have an Operations document that states your club frowns on such things. There's no need to lock your club into amendment changes that can always be changed, anyway, with a majority vote. Same goes for Options.

The Crow River club has two documents that govern our club. Our P/A is kept as short as possible with legalities, etc. We also have an Operating Procedures document that guides our day to day decisions. Changes to the P/A are formal and require amendments. The latter document simply spells out our feelings on a variety of issues and situations, all of which can be changed at any time with a majority vote. You can find both on our homepage at www.bivio.com/crowriver. Feel free to use them as a springboard for your own creative ideas. We find this is more flexible than setting rules in stone that we may need to make exceptions to, later on.

Lynn Ostrem

garbagecop@gmail.com

Crow River Investment Club

www.bivio.com/crowriver

Rip West on

Hi John,

I would just add one point to Lynn's suggestions. You say in connection with partners partial withdrawals:

Or have no stated rules and have it as a case by case basis.
>>

My personal preference is to have no rules at all on this, but if you don't, it should not be on a case by case basis. In the absence of rules, if you allow one member to have partial withdrawals [as I think you should], you should allow all partners to do this.

Rip West
Saint Paul, MN

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